Amazon reported accelerated revenue growth in its cloud business. Its stock jumped 9%.

Amazon Web Services, the company's cloud computing division, has accelerated its revenue growth for the fifth consecutive quarter. This has eased investors’ concerns that the company would be unable to recoup the costs associated with meeting the rapidly growing demand for artificial intelligence, according to Bloomberg. The company continues to invest in AI data centers: Amazon raised its annual capital expenditure forecast to $220 billion. The company’s shares jumped 9% in after-hours trading on July 30.

Revenue from Amazon Web Services, which accounts for about one-fifth of the company’s total revenue, jumped 37% in the second quarter. This is the highest revenue growth rate since the fourth quarter of 2021, Bloomberg notes. Revenue totaled $42.2 billion, exceeding analysts’ expectations of $40.54 billion, according to CNBC, citing data from StreetAccount. The division’s sales growth has accelerated for five consecutive quarters.

Like other major tech companies, Amazon is actively investing in data centers and its own chips, seeking to capitalize on the growing demand for AI and cloud computing services, according to Bloomberg. The company’s capital expenditures for the quarter exceeded $53 billion. These expenditures resulted in Amazon’s free cash flow for the previous 12 months turning negative by the end of the second quarter, with an outflow of $7.6 billion.

Amazon has raised its capital expenditure forecast for 2026 from $200 billion to $220 billion. CEO Andy Jesse said during a conference call that most of this amount will be allocated to AI. “We are in an exceptionally strong position to capitalize on this pivotal moment in the development of AI,” he said.

"Despite the increase in capital expenditures and negative cash flow, 'investors are unlikely to be deterred, given the acceleration in AWS revenue growth and tight cost control in other areas,'" Sky Canaves, an analyst at eMarketer, told Bloomberg.

Amazon's stock rose 9.2% to $257.2 in after-hours trading on Thursday following the release of its earnings report. During regular trading hours, the stock rose 3.9% to $235.5.

Ad sales brought Amazon $19.8 billion. Wall Street had forecast $19.4 billion. Annual revenue for Amazon’s AI and chip divisions, on a current-rate basis, has reached a new milestone—$25 billion each. Both businesses are growing at triple-digit rates year over year, the company said.

Amazon's total revenue rose 19.6% year-over-year to $200.6 billion, compared with analysts' expectations of $196.47 billion, CNBC reports, citing data from LSEG. Earnings per share came in at $5.75.

Amazon expects revenue for the current quarter to range from $197 billion to $202 billion. Operating profit is expected to range from $22.5 billion to $26.5 billion. Analysts surveyed by Bloomberg forecast, on average, a profit of $25.1 billion on revenue of $203.9 billion.

On July 29, Microsoft reported its fastest cloud business growth since 2022 and made it clear that it would not increase its capital expenditures planned for this year. The company’s sales in the Intelligent Cloud segment grew 32% year-over-year. Following the release of the report, Microsoft’s stock posted its largest one-day gain since 2008, rising nearly 16% in a single day.

Alphabet's stock fell last week after the company reported higher-than-expected capital expenditures and posted a negative free cash flow for the first time since going public more than 20 years ago. At the same time, Google’s cloud business posted 82% growth.

This article was AI-translated and verified by a human editor